Gratuity on ₹40,000 basic salary for 5 years

Gratuity amount, formula and tax treatment.

With a last drawn basic salary + DA of ₹40,000 a month and 5 years of service, your gratuity is ₹1,15,385 under the Payment of Gratuity Act.

Gratuity amount

₹1,15,385

Per year of service

₹23,077

If employer not covered by the Act

₹1,00,000

₹40,000 × 15 × 5 ÷ 26 = ₹1,15,385

Change salary or service in the gratuity calculator →

Same salary, different years of service

Years of service	Gratuity
5 years	₹1,15,385
7 years	₹1,61,538
10 years	₹2,30,769
15 years	₹3,46,154
20 years	₹4,61,538
25 years	₹5,76,923

Is this gratuity taxable?

For private-sector employees, gratuity up to ₹20 lakh over a career is tax-free under section 10(10), so ₹1,15,385 would be fully exempt (if you haven't received gratuity tax-free before). For government employees, gratuity is fully tax-free.

Remember

Gratuity is usually payable after 5 years of continuous service with the same employer.
More than 6 months in your final year counts as a full year under the Act.
Only basic salary and dearness allowance count — not HRA, bonus or other allowances.

Other salaries, 5 years of service

Frequently asked questions

How much gratuity for ₹40,000 basic salary and 5 years?

Using the formula basic × 15 × years ÷ 26, gratuity is ₹1,15,385. If your employer isn't covered by the Gratuity Act, it is ₹1,00,000 (divisor 30).

Is gratuity calculated on gross salary?

No. Gratuity is calculated on your last drawn basic salary plus dearness allowance only.